NU Online News Service, March 16, 12:01 p.m. EST

WASHINGTON—Sen. Jay Rockefeller, D-West Va., called out the National Association of Health Underwriters and Florida Insurance Commissioner Kevin McCarty, saying their lobbying for agent exemptions from the medical loss ratio "will cost American consumers $1 billion in benefits."

Sen. Rockefeller's comments came in a letter to the National Association of Insurance Commissioners (NAIC), which plans to hold a hearing on producer compensation at its upcoming spring meeting, March 27 in Austin, Texas.

It also comes as Rep. Mike Rogers, R-Mich., and John Barrow, D-Ga., prepare to introduce legislation that would exempt agent commissions from the MLR.

The MLR provision in the Patient Protection and Affordable Care Act (PPACA) requires health insurers to spend at least 85 percent of large group revenue and 80 percent of individual and small group revenue on health care and quality improvement efforts. The remaining percentage may be spent on administrative costs. Agents have been pushing to exclude their commissions from counting toward the administrative costs.

NAHU, the National Association of Insurance and Financial Advisors, and the Independent Insurance Agents and Brokers of America are all supporting the Rogers/Barrow legislation.

"A legislative fix of the MLR issue is crucial," said Diane Boyle, NAIFA vice president of federal government relations. "Quick congressional action is the best way to ensure consumers don't lose valuable services—from claims assistance to small-business HR functions—that licensed insurance agents provide their clients every day."

She also cited Maine's efforts to get an exemption from the MLR to help both agents and brokers and the small insurers who operate in the state.

"Maine's difficult, six-month effort to procure an MLR exemption shows that a broader fix is needed," Ms. Boyle added. "We believe the bipartisan Rogers-Barrow legislation would provide that."

In his letter to the NAIC, Sen. Rockefeller said he disagreed with the NAIC's decision to reopen the issue.

He also said he "wholeheartedly shares your appreciation for the valuable work that licensed insurance agents and brokers do on behalf of their customers," and "recognizes the valuable role agents and broker play in helping American consumers and businesses purchase health insurance."

But, he said, "I cannot support a proposal that would allow agents, brokers and health insurance companies to retain the estimated $1 billion in benefits that American consumers will receive next year thanks to the health care reform law."

He said the purpose of the law's MLR was to encourage health insurance companies to deliver health care services to their customers in a more efficient and cost-effective way.

"While many insurers were already delivering health care at levels that meet or exceed the law's minimal MLR targets of 80 percent and 85 percent, many others were not.

"I am encouraged by the fact that the new law is prompting many health insurance companies that were not meeting these targets to conduct a long-overdue review of their business operations and make changes that will result in higher-quality care and lower premiums for their customers," Sen. Rockefeller said.

The NAIC hearing will be held by the Professional Health Insurance Advisors Task Force, an arm of the Executive Committee of the NAIC.

The task force will be hearing comments from all interested parties about the possible impact of the new MLR rules on producers, insurance consumers and insurance markets.